Constantia Accounting

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The home-based business model has taken hold and the leafy street of Constantia are no exception. As businesses realise the benefits to both employees and employers, work from home employees are also on the increase. These arrangements incur at home expenses and open the door to additional tax deductions, but these are often flagged by SARS and placed under additional scrutiny. To avoid unnecessary administration and verification processes imposed by SARS, claiming the correct deductions first time round makes sense.

Home based business vs, work from home employee.

A sole proprietor or freelancer who operates a business from there home can dedust all home office expenses under the Local Business, Trade and Professional Income” section of the ITR12. An employee i.e., someone who is paid a salary and works from home, has much more stringent set of requirements to fulfil. Due to the enormous increase in deductions claimed as home office expense since the inception of the Covid pandemic, SARS has become increasingly suspicious of false claims. 

Requirements

In order to claim home office expenses as an employee, you must comply with the following:

1. The employer must provide you with letter which states that you are required to work from home.

2. More than 50% of your time spent working must be home based.

3. The room as an office must be used exclusively for business purposes. Shared spaces are not allowed.

4. The office needs to be appropriately outfitted for the work being done.

If you can comply with all these requirements, you will be allowed to deduct certain expenses as home office expenses. 

Commission earners vs Salaried Employees

The amounts to be deducted depend on whether you are classified as a commission earner or a normal salaried employee. A commission earner is classified as someone who earns more than 50% of their earnings in the form of commission. 

A commission earner can deduct rent, repairs, rates and taxes, cleaning, and wear and tear costs in the as well as internet, telephone, and stationery costs.

A salaried employee is not able to claim internet, telephone, and stationery costs

ed commission related business expenses. Remember to estimate the % of business and personal use and only claim for the business portion.